Nationwide announces mergers

Mortgage lender Nationwide announced mergers with smaller mutuals the Derbyshire and Cheshire building societies.

Both groups had asked the Nationwide to consider deals following the identification of financial issues.

The Cheshire has assets of £4.9 billion, 45 branches and more than 440,000 members, while the Derbyshire has assets of £7.1 billion, 50 branches and 485,000 members.

Nationwide intends to retain the brands and branch networks and said it will not be making any special payment to members of the two societies.

Both groups expect to report losses for the first half of 2008.

Derbyshire's £17 million deficit reflects its exposure to sub-prime and commercial loans, while the Cheshire fell into the red by £10.5 million because of a one-off write-down on a single commercial loan.

Nationwide chief executive Graham Beale said: "The Derbyshire and The Cheshire have independently concluded that a merger with Nationwide is in the best interests of their savers and borrowers given the financial issues faced by both societies."

He said the core parts of the societies were in good shape and that it was in a "unique position", given its size, to offer support.

The deals create an organisation with almost 15 million members, around 1,000 retail outlets, £191 billion of assets and £122 billion of retail deposits.